Support

A cookie is a piece of data stored by your browser or device that helps websites like this one recognize return visitors. We use cookies to give you the best experience on BNA.com. Some cookies are also necessary for the technical operation of our website. If you continue browsing, you agree to this site’s use of cookies.

Events

Bloomberg Next marketing services allow clients to elevate their brands and extend their reach through our established and trusted expertise, enhanced with engaging event production, appealing design, and compelling messaging.

The Mortgage Modification Mediation program used in bankruptcy cases in Orlando, Fla.,
has proved to be a success and has spawned similar programs in other U.S. jurisdictions.

The program puts lenders or loan servicers and their counsel in the same virtual room
as debtors and their counsel with the purpose of seeing whether a loan modification
can be worked out.

About half the time, it is. This number is far higher than the 2 percent success rate
of the Florida state court’s foreclosure mediation program, Aubrey Ducker told Bloomberg
Law. Ducker is a Florida attorney with extensive experience in foreclosure mediation.

Benefiting Everyone

Even if a loan modification isn’t in the cards, parties often benefit from the process.
Sometimes a debtor learns one isn’t possible and has an easier time walking away from
an underwater property, Laurie Weatherford told Bloomberg Law in a Jan. 24 call with
other professionals. Weatherford is the Chapter 13 trustee serving the Orlando area.

Weatherford said the program was born out of frustration experienced by Judge Karen
S. Jennemann of the U.S. Bankruptcy Court for the Middle District of Florida.

Jennemann was frustrated by the number of bankrupt debtors she would see who tried
to apply for mortgage modifications only to get no response from the lender or loan
servicer.

Jennemann called on Weatherford in 2009 to put together a committee of interested
professionals to see if they could come up with a solution. Bankruptcy courts in Orlando
launched the MMM program the next year.

The program works best in Chapter 13, Weatherford said. But it can also be used successfully
in Chapter 7.

Here’s how it works: An individual or married couple have 90 days after filing for
bankruptcy to file a motion for Mortgage Modification Mediation. Secured creditors
can oppose or object, but they don’t, Weatherford said.

The court’s
website says it will prepare and enter an order directing MMM.

Utilizing Technology

The parties use a secure web portal for submitting documents to initiate mediation.
Correspondence must go through the portal.

The portal is a key component to the program, Robert Branson told Bloomberg Law. Branson
is a consumer bankruptcy attorney in Orlando who also serves as a mediator in the
MMM program.

It’s important because more often than not, loan modification applications fail because
documents are misplaced or lost, and it’s difficult to get the lender to focus attention
on the application, he said. The portal eliminates the lost document problem.

Mediation must conclude within 150 days of the case filing unless the parties agree
or the court orders differently. They select a mediator from a pre-approved list.

Both lenders and debtors contribute $250 to pay the mediator. Mediations take place
by phone.

Making the Numbers Work

“The mediation is making the numbers work for the loan servicer and underwriter,”
Weatherford said. “Debtors need to show that a proposed deal is affordable and won’t
fail.”

Usually the parties, if they reach an accord, set up a temporary modification. Once
three to five payments are made, the lender will agree to a final modification. That’s
approved by the court.

According to data compiled by Weatherford’s office (tracking MMM activity in only
Chapter 13 cases), there have been 7,779 mediations opened since the program began
in 2010 through December 2017. Of that, 5,756 have been completed.

Of the completed mediations, 3,903, or 67.8 percent, concluded with loan modifications.
In 2017, there were 486 completed mediations, with 274 (56.4 percent) of those ending
in modifications.

Ultimately, success comes down to improved communication. With the portal and mediation,
lenders understand better the debtors’ financial situations and ability to succeed
in a modified loan.

And debtors get the benefit of understanding financial requirements of lenders. If
they don’t get a modification, it’s because the numbers don’t work. It’s not because
lenders lost documents or didn’t understand the debtors’ income and expenses.

Profound Effect

Successful loan modification can have a profound effect on debtors struggling to get
a fresh start through bankruptcy.

“If we can get a $1,700 payment down to $800 a month, we’ve changed the lives of debtors,”
Tammy Branson said. She’s a paralegal working with her husband, attorney Robert Branson.
They were instrumental in the formation of the program and frequently guide clients
through the MMM process.

“We’ve given them a way to keep their homes, their dignity,” she said.

A Model for Others

The program has been adopted all over Florida, the professionals said. And many other
jurisdictions nationally have built mediation programs using Orlando’s MMM as a model.
In fact, many jurisdictions use Orlando-based mediators for their programs.

These jurisdictions include the districts of Nevada, South Carolina and Arizona, as
well as the Southern District of Indiana and the Northern District of California.

All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.

Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)

Notify me when updates are available (No standing order will be created).

This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.

Put me on standing order

Notify me when new releases are available (no standing order will be created)